Navigant Consulting’s Paula Mints reviews the year 2010, and offers a solar PV-themed update on a musical Christmas classic.
by Paula Mints, Navigant Consulting
December 10, 2010 – At ~102% growth over the previous year, 2010 — problems, setbacks and all — was a blast. Germany was at the heart of the party, consuming at least 50% of 16GWp shipped into the market. Announced reductions and changes to Europe’s feed-in tariff (FiT) rates and structures are causing anxiety, along with the usual extreme optimism that a new market will absorb the PV industry’s significant over capacity. (In PV, extreme optimism is a sport, and sometimes a dangerous one.)
Nonetheless, amid the dire warnings of collapse, along with the optimistic view that this can never happen, one truth stands out: The PV industry has thus far never experienced a decrease in annual demand. Shipments have been flat or slow, but never negative (in the aggregate). Inventory levels may obfuscate the demand picture, leading to questions as to the true meaning of demand and supply — in the end, it seems it doesn’t matter whether capacity, production, shipments, or installations are counted, the trend has historically been up. Difficult times are ahead for the industry in 2011 and 2012, and someday the industry will mature and demand will slow, but for now, the industry can celebrate an amazing 2010 — 40% of the industry’s cumulative volume was shipped in one year. Wow.
Soaring demand this year led to significant changes in the FiT rates in many countries with some countries announcing new degressions monthly. In Spain, the government announced that some systems charged with permit violations would face incentive reductions, and the Czech Republic instituted a retroactive tax that may as well be a FiT rate reduction.
Thin films lost share in 2010, slipping from 17% of 7.9GWp in 2009 to a likely 13% of 16GWp in 2010 — but 13% of a 16GWp market is not too shabby. A constraint in polysilicon supplies reared its ugly head near the end of the year, and shipments from China/Taiwan will supply ~60% of industry demand.
Entering 2011 the industry faces a host of concerns including margin squeeze, raw material constraints, lowered FiT rates, government wariness about overblown markets, and an increasing need for standardization and quality control. Despite all this, demand is likely to increase in 2011. The figure below offers a forecast through to 2014 for three scenarios: decreased incentives, conservative, and accelerated. Following the forecast is possibly the worst ever rendition of the Twelve days of Christmas, rewritten for the solar industry.
|Global demand to 2014.|
And offered to celebrate the amazing growth achieved in 2010 an admittedly terrible solar version of the Twelve Days of Christmas is offered. (Warning — do not sing this at home or in company. Do not even try to hum it.)
The Twelve Solar Days of Christmas
- On the first day of Christmas my industry gave to me: An extension of the grant in lieu of ITC eligibility.
- On the second day of Christmas my industry gave to me: Thin-film bankability.
- On the third day of Christmas my industry gave to me: Volume CPV commercial entry.
- On the fourth day of Christmas my industry gave to me: Margins that allow for profitability.
- On the fifth day of Christmas my industry gave to me: Five… new… FiTs!
- On the sixth day of Christmas my industry gave to me: Full capital market recovery.
- On the seventh day of Christmas my industry gave to me: BLM fast track priority.
- On the eighth day of Christmas my industry gave to me: True price of fossil fuel visibility.
- On the ninth day of Christmas my industry gave to me: Standards for installation quality.
- On the tenth day of Christmas my industry gave to me: Commercial CIGS at low cost and 15% efficiency.
- On the eleventh day of Christmas my industry gave to me: Cost-efficient storage for CSP.
- On the twelfth day of Christmas my industry gave to the three billion people in the developing world: Life-changing electricity.
(Go ahead, groan.)